The Indian SMS ban - lessons for South Africa

When Spanco, a power provider to the city of Nagpur in central India, was
forced to start load shedding in October 2011 it was unable to send SMS
notifications to the 225,000 customers who had provided their mobile numbers.
According to an official from Spanco speaking to the Times of India, despite
publicity about the load shedding many customers were still unaware of it and
the company was inundated with calls from angry customers complaining about
power cuts. In addition, the company was no longer able to send customers
acknowledgements of bill payments or complaint reference numbers by SMS.

Similarly, the traffic police in the city of Chennai, on India’s east coast,
were unable to alert residents about traffic jams, diversions and road closures
by SMS anymore. At the tail end of monsoon season, people relied on the service
to find out where the rain had closed roads and plan their journeys
accordingly. The newly launched service had been sending people up to 20 free
SMSs per day notifying them of traffic issues. It was so popular that within
the first two weeks 12,000 people had registered to receive these SMS alerts.

Both these SMS services have been forced to a halt, to the detriment of the
organisations and the recipients, as a result of a ruling by the Telecom
Regulatory Authority of India (TRAI) limiting SMS sending to 100 SMSs per SIM
per day. The ruling was passed in late September and was subsequently relaxed
at the start of November to allow 200 SMSs per SIM per day.

The ruling was put in place with good intentions: to limit the large number of
spam SMSs some 850 million Indian cell phone users receive every day.
Unfortunately the impact of the ruling has also been to halt a number of useful
and legitimate SMS alert services such as those mentioned above as well as
alerts from schools, taxi operators and car rental agencies.

Registered telemarketers can continue sending SMSs via a specific prefix, and
there are a number of types of SMS messages that have been exempted from the
ban including directory services and transactional services. However, the state
of affairs seems confusing, for example the Chennai City Traffic Police told
the newspaper, The Hindu, it would need to apply to the TRAI for an exemption
for its traffic.

As well as these consequences, enforcing the 200 SMS limit per SIM per day is
problematic for mobile operators. Mechanisms had to be put in place by
operators to monitor volumes and stop messages being sent once the daily limit
was reached. It also meant that existing unlimited messaging contracts would be
reneged on.

The way TRAI has approached tackling unwanted direct marketing communications
via SMS has not only had unintended consequences for people sending and
receiving legitimate messages, it also unfortunately is not tackling the
underlying reason for India having so much SMS spam.

The reason SMS spam has reached the same volumes in India that email spam has
for the rest of us is because the country’s SMS rates are the lowest in the
world. Before the ban, unlimited SMS packages cost Indian cellphone customers
as little as 100 Rupees (around R16). In addition, companies can buy direct
connection to the operators on a fixed cost basis – so the more messages they
send, the cheaper the individual message cost.

A better approach

A preferable solution to the problem of SMS spam in India would firstly have
been to move from an opt-out scenario to an opt-in scenario. Then the regulator
should have raised the price of sending SMSs in India. One of the ways this
could have been done is by introducing a termination charge to the SMS cost
structure. This means that the operator that delivers the SMS to the end
recipient is allowed to charge for terminating the message, and so the overall
cost of sending an SMS would go up. To be effective as a deterrent against
spam, the cost of SMS needs to increase enough to disrupt the economies and
returns that make sending unwanted marketing messages worthwhile for the sender.

Another benefit of introducing a termination charge is that it would be
possible to trace spam messages back to their source, and then levy the hefty
fines that TRAI has already introduced for unsolicited communications.

This highlights just how essential it is to regulate SMS messaging for the
benefits of both businesses and the general public, especially when it comes to
transactional and emergency notifications. What the India case shows is how the
increase in unwanted commercial messages can undermine legitimate business
communications, especially for those entities sending emergency and
transactional alerts to their customers. However, the way spam is tackled by
the regulator should be carefully considered to avoid unnecessary fallout.

But this is also food for thought when it comes to how we are tackling SMS spam
in South Africa. Here, we are currently grappling with issues such as how to
set up a do-not-contact registry under the Consumer Protection Act; how strong
to make the Protection of Personal Information Bill when it comes to people
opting into marketing communications from companies; and whether allowing
cross-network application-to-person SMS between incumbent and new operators
will increase or reduce SMS spam. In considering these points, South African
regulators and the WASP industry can draw lessons from India and the way in
which TRAI tried to regulate the sending of commercial SMS messages.